Savings Accounts

To reach your financial goals, you need a safe place to keep your savings. By opening a savings account at a bank or credit union, you’ll not only gain that security, but you might even earn some "interest" along the way.

Interest is money the bank or credit union pays you for keeping money at that institution. Interest rates can differ from bank to bank, and often the more money you deposit, the higher rate of interest you earn. No matter what the rate, interest is money added to the funds you deposit into your account.

Read on for tips on shopping for the best savings account for your needs.

Benefits of Opening a Savings Account

8 Questions to Ask to Find the Best Deal for Your Savings Account

Benefits of Opening a Savings Account

A savings account is important because it provides a safe place to store money. If you hide your savings at home, the money could be stolen or lost, or it could prove too tempting to spend.

By opening a savings account at a bank or credit union, your money is not only being kept safe for you, but also safe from you. If you have to go to the bank every time you want to spend some of your savings, you may realize that you don't really need the item you thought you wanted to buy.

In addition, when you keep your money in a savings account, you're getting a little free money just for keeping it there because the account usually earns money, called "interest." The bank adds these interest payments to your account, usually monthly or quarterly. When combined with your regular savings deposits, this interest can really add up over time.

For example, let’s say you put $100 in a savings account that earns 5 percent interest. After a year, you’ll have $105. At the end of the second year, you’ll have $110.25. That’s because you received the interest on the $105, not the starting balance of $100. Over time, this compounding interest can really add up.

Another type of savings account is known as the Individual Development Account (IDA). If you qualify, IDAs are a great way to save money for specific goals, such as additional education or starting a business, because the money you save is matched by a sponsor. That means even more money is going into your savings account!

Back to Top

8 Questions to Ask to Find the Best Deal for Your Savings Account

Before opening a savings account, shop around. Here are eight questions to ask:

1. How much money do I need to deposit to open the account?
2. Is there a minimum balance that I must keep in the account to avoid paying fees?
3. How much interest does the account pay?
4. How often is the interest credited to the account?
5. How do I make withdrawals?
6. Is there a limit on the number of withdrawals from an account each month? (Remember, the whole point of having a savings account is to leave the money there, so a few reasonable limits on how often you can take money out should not be a problem.)
7. How do withdrawals affect the interest my money earns?
8. Can I write checks from the account?

Back to Top